New Oriental Education’s decision to target its programs towards after-school tutoring for younger Chinese is finally paying off. The company took the decision to focus on this segment a few years back, but while the transition has resulted in significant revenues, it is only just beginning to turn it into meaningful profit. The reason for this is simple: while enrollment in the company’s programs was consistently high, spending on new infrastructure and teacher salaries was equally so. That’s beginning to change.

New Oriental Education’s share price is up an incredible 55% year-to-date!

SOURCE: Yahoo Finance

For the third quarter of 2017, New Oriental Education reported that revenue rose by 26% (33%, in constant currency), non-GAAP earnings per share rose by 43%, and enrollment in its programs was up 5.9%. All of these figures are based on a comparison with the previous year. This is big turnaround from previous years, which saw incredible enrollment wins but little movement in earnings.

“During fiscal year 2017, we will continue to focus on our optimized market strategy. With the current success achieved, we are confident that we have the right strategy in place and that will continue to drive additional progress and help us create long-term value for all shareholders.”

For the next quarter, New Oriental Education said that it expects revenue growth in the range of 18% to 22% in U.S. currency, or 25% to 29% in constant currencies.

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